What does ‘qualified’ actually mean for a contractor accountant?

Few things are more worrying than trusting somebody else with your money, but when you choose an accountant, you’re effectively doing just that.

Whether you need someone who can manage your personal affairs in a tax-efficient way or a specialist contractor accountant, there are a couple of useful ways to find a qualified accountant and safeguard your financial affairs.

Professional memberships and qualifications

A professional affiliation is a useful way to identify accountants who are committed to their careers in the long term.

Chartered and professional bodies

• The ICAEW (the Institute of Chartered Accountants in England and Wales) has existed since 1880 and now has over 210,000 members and students worldwide.
• ACCA (the Association of Chartered Certified Accountants) is a global organisation with over 257,000 fully qualified members and more than 530,000 students across 180 countries. It was established in 1904.
• For businesses focused on management accounting, there is CIMA (the Chartered Institute of Management Accountants, now part of AICPA & CIMA), with over 229,000 members and students worldwide.

These organisations have rigorous entry requirements, including professional examinations, relevant work experience, and mandatory continuing professional development (CPD).

This helps ensure their members remain up to date with changes to tax rules and accounting regulations.

Depending on your needs, choosing an accountant who is a member of one of these bodies is a good way to ensure a baseline level of qualification and professional standards.

Other recognised accounting bodies

• ICAS (Institute of Chartered Accountants of Scotland) – the world’s first professional body of chartered accountants, representing members primarily in Scotland but also internationally.
• Chartered Accountants Ireland – the largest professional body for accountants in Ireland, serving members across both Northern Ireland and the Republic of Ireland.
• Association of International Accountants (AIA) – an international professional body offering qualifications recognised in the UK and overseas.
• Institute of Financial Accountants (IFA) – a UK-based professional body representing financial accountants and small firm practitioners.
• Association of Accounting Technicians (AAT) – a professional body providing vocational accounting qualifications and support.

Is the firm qualified, or the individual?

It is worth noting that you may be assigned an account manager who is not personally qualified, even though someone senior within the firm is.

For many contractor-related accounting activities, a non-qualified accounts manager is perfectly capable of handling day-to-day compliance and routine work.

However, only a suitably qualified accountant within the firm can usually sign off on statutory accounts or provide documents such as mortgage references.

This setup is common within contractor-focused accounting firms, where account production is often highly standardised and streamlined.

You may need to pay a higher fee if you want your affairs handled directly by a qualified accountant rather than an accounts manager.

If your tax affairs are more complex, or you need broader advice beyond basic compliance, a more traditional accountancy practice may be a better fit than a contractor specialist.

Professional indemnity insurance

No matter who you choose to work with, things can go wrong, and when they do, you will want to know you have some form of protection.

The key policy to look for is professional indemnity insurance (PI).

Professional accountants should hold PI insurance to cover claims arising from negligent advice or errors.

If an accountant’s mistake costs a client money, PI insurance provides a route for compensation.

PI insurance is compulsory for ICAEW, ACCA, and most other chartered bodies, with minimum cover levels set by their professional bodies.

Recommendations and word of mouth

Accountancy is a profession where word of mouth still matters, and many good accountants build their client base through long-term recommendations.

If you know people who have worked with the same accountant for years without issues, that can be a useful starting point.

Even so, it is sensible to confirm qualifications and professional indemnity cover if you are relying primarily on a recommendation.

• Read this guide for more tips: 8 things to look out for when choosing a contractor accountant.
• See our Top 10 contractor accountancy providers.